U.S. Inquiry Into Google Has Search As Its Focus

By MIGUEL HELFT

Published: June 25, 2011

Google confirmed on Friday that the Federal Trade Commission had opened an antitrust investigation into its core search and advertising business.

The inquiry has the potential to turn into the biggest showdown between the United States government and a major technology company since the Microsoft antitrust trial that began in the late 1990s.

In a regulatory filing, Google said that a day earlier it had ''received a subpoena and a notice of civil investigative demand'' from the commission. Google said that the agency's investigation concerned its ''business practices, including search and advertising.'' In the brief filing, the company added, ''Google is cooperating with the F.T.C. on this investigation.''

The investigation will not necessarily lead to accusations of misconduct against the company. If it does, it could become the most serious antitrust challenge for Google to date.

In a blog post, Google said it was unsure about the precise focus of the commission's concerns. But it began outlining its defense against accusations, made by some of its rivals, that it had manipulated its search results to favor its own services at the expense of others.

''At Google, we've always focused on putting the user first,'' wrote Amit Singhal, a Google fellow. ''No matter what you're looking for - buying a movie ticket, finding the best burger nearby, or watching a royal wedding - we want to get you the information you want as quickly as possible. Sometimes the best result is a link to another Web site. Other times it's a news article, sports score, stock quote, a video or a map.''

Mr. Singhal also sought to play down the dominant role that Google had in determining where users went on the Internet. ''Search helps you go anywhere and discover anything, on an open Internet,'' he wrote. ''Using Google is a choice - and there are lots of other choices available to you for getting information: other general-interest search engines, specialized search engines, direct navigation to Web sites, mobile applications, social networks and more.''

Google's business practices and its dominance over the Internet have come under scrutiny from the Justice Department and the Federal Trade Commission a number of times in recent years. But the previous cases focused either on acquisitions or on portions of Google's business that were not critical to its survival, like its plan to create a giant digital library.

The current investigation focuses on the heart of Google's business, the search and advertising systems that account for nearly all of the company's $29 billion in annual revenue.

''This is major league,'' said Ted Henneberry, a former trial lawyer at the Justice Department and a partner at Orrick Herrington & Sutcliffe. Google is facing a similar challenge in Europe, where the European Commission opened an investigation into Google's business late last year. ''Given what's happened in Europe, they must have known this was inevitable,'' Mr. Henneberry said.

In a statement, FairSearch.org, an organization that represents several of Google's critics, including Microsoft and the Web sites Expedia, Travelocity and Kayak, said that Google's ''anticompetitive practices include scraping and using other companies' content without their permission, deceptive display of search results, manipulation of search results to favor Google's products, and the acquisition of competitive threats to Google's dominance. Google's practices are deserving of full-scale investigations by U.S. antitrust authorities.''

Google's search engine practices have also became a matter of interest for Congress. The Senate Judiciary's antitrust subcommittee has asked the company to send Eric E. Schmidt, the executive chairman, or Larry Page, the chief executive, to testify before the committee on issues relating to competition in Internet search. Google declined, instead offering to send David Drummond, the chief legal officer, saying he was best prepared to answer questions on the topic.

In a statement, Mike Lee of Utah, the ranking Republican senator on the committee said: ''I'm very disappointed in Google's response to the request to have Larry Page or Eric Schmidt testify at our subcommittee hearing.'' Mr. Lee has suggested that the committee might issue subpoenas to compel Google's top two executives to testify.

This is a more complete version of the story than the one that appeared in print.